A manager in charge of new product development can hire engineers and market researchers.The annual salary of an engineer is $40,000,while a market researcher receives $20,000.The marginal contributions of engineers and market researchers are: Based on the above information,if the manager currently hires four engineers and one market researcher,what must be true?
A)She is making the correct decision because $$M P _ { E } = M P _ { R }$$ .
B)More new products would be developed if she hires more engineers and fewer market researchers.
C)More new products would be developed if she hires fewer engineers and more market researchers.
D)She is not making the correct decision because engineers are more productive than market researchers at all levels of output. .

Question

A manager in charge of new product development can hire engineers and market researchers.The annual salary of an engineer is $40,000,while a market researcher receives $20,000.The marginal contributions of engineers and market researchers are:  Based on the above information,if the manager currently hires four engineers and one market researcher,what must be true?
A)She is making the correct decision because $$M P _ { E } = M P _ { R }$$ . 
B)More new products would be developed if she hires more engineers and fewer market researchers. 
C)More new products would be developed if she hires fewer engineers and more market researchers. 
D)She is not making the correct decision because engineers are more productive than market researchers at all levels of output. .

Quizplus · Accepted Answer

The question asks what must be true if the manager hires four engineers and one market researcher. To answer this, we need to compare the marginal contributions of the engineers and market researchers.

From the given information, we know that the marginal contribution of an engineer is "10 new products per year per engineer" and the marginal contribution of a market researcher is "5 new products per year per market researcher."

If the manager hires four engineers and one market researcher, the total marginal contribution would be:

(4 x 10) + (1 x 5) = 45 new products per year

To determine if this is the best choice, we need to compare it to other possible combinations of engineers and market researchers.

If the manager hires five engineers, the total marginal contribution would be:

5 x 10 = 50 new products per year

This is a higher marginal contribution than the combination of four engineers and one market researcher, so we can eliminate option A.

If the manager hires three engineers and two market researchers, the total marginal contribution would be:

(3 x 10) + (2 x 5) = 35 new products per year

This is a lower marginal contribution than the combination of four engineers and one market researcher, so we can eliminate option B.

If the manager hires two engineers and three market researchers, the total marginal contribution would be:

(2 x 10) + (3 x 5) = 25 new products per year

This is a much lower marginal contribution than the combination of four engineers and one market researcher, so we can eliminate it.

Therefore, the best choice is to hire four engineers and one market researcher, making option C the correct answer.

A Manager in Charge of New Product Development Can Hire MPE=MPRM P _ { E } = M P _ { R }MPE​=MPR​

A Manager in Charge of New Product Development Can Hire $M P _ { E } = M P _ { R }$